While the entire business world was dominated by slowdown, insurance showed mixed results in April, a month when the past year is introspected upon and new strategies are formed to win in another financial year.
Health insurance posted a growth of 30 per cent in FY 09 moving to Rs. 6500 crore in premium, grossing a share of over 20 per cent on the total for the first time. The potential of this insurance in the country can be understood when we look at the total health care expenses of India, which exceeds Rs. 2 lakh crore, leaving insurance to finance a paltry 3 per cent of the total.
Health insurance was also in the news further with IRDA issuing a circular to the insurers not to deny renewal of policies, to inform customers adequately about the product and renewal terms as well as to provide a 15 day grace period to renew. This is expected to ease the burden of consumers who face problems when their health policies come up for renewal.
A Health Insurance Council to focus on the sector is in the anvil to standardise practices and aim at providing better customer service. This body will consist of insurers, healthcare providers and third party administrators. It is important for this council, formation of which may require the Insurance Act amendment to go through the Parliament, to formulate guidelines for providing convenient healthcare financing to the consumers.
Antony Jacob has taken charge at the helm of Apollo DKV Insurance Company based out of Gurgaon. He is returning to India after a stint overseas, following his tenure as the managing director of Royal Sundaram at Chennai.
IRDA committee on Third Party Administrators is expected to submit its report soon following deliberations with all stakeholders. It is expected to address the minimum benchmark standards of service on health insurance policies and to put the house of TPAs in order, after a seven year experience of operation. In the meantime public sector general insurers are stated to have finalised a consultant to advise them on their plan to set up a Third Party Administrator.

Economic slowdown impacts life insurance
Well, slowdown did seem to have some impact on the life insurance business, where the barometer of new business premiums took a dip of 6 per cent from Rs. 93,000 crore to Rs. 87,000 crore. This was on expected lines since growth in life insurance in the recent times has been due to ULIPs and single premium policies which no longer becomes the gold or sought after schemes. The industry is expecting a return to normalcy be second half of FY10.
It was otherwise business as usual for life insurers with no let up in new products and schemes hitting the market.
Bajaj Allianz’s loss was HDFC Standard Life’s gain at the Indian Premier League, with the sponsorship changing hands for the last year’s winning side.
Life insurance in India was known to be a long term game - this has been proved right as many of the life insurers are yet to break even, after eight years of industry opening up. This is because of a high expense outlay on new business, which involves substantial advertising, creation of agency force and payment of high first year commissions. Life insurers have augmented capital multifold to be in line with the business they do. More than Rs. 10,000 crore of capital entered in this industry in the past year.
The major change that was talked about in life insurance circles was V.Vaidyanathan moving in as MD and CEO of the largest private sector life insurance company, ICICI Prudential. As an insider, he brings in experience across banking sector and having been on the board of the insurance company. In the same shuffle Bhargav Dasgupta, ED of ICICI Prudential, has taken charge at ICICI Lombard, the largest private company of the general insurance side.
Good news is coming from the pensions side with the National Pension Scheme being proposed to be extended to all. NPS has delivered returns of more than 10 per cent so far within its limited subscriber base. As the scheme is modified and presented to the entire public (post-elections), as the advertisements from the administrator says, let us hope there is a good channel for providing protection post-retirement.
While Bharti and Axa moved to split ways on the mutual funds side, their insurance joint ventures remain intact, as per news coming from the company.
Bharti Axa as well as Cholamandalam Insurance companies are expected to up their capital, showing growth expectations in general insurance.

GI - discount war gets a respite
April used to be the most happening month for general insurers. This is because a major chunk of the corporate insurance business gets placed at the stroke of the financial year. Last year saw a discount war between companies and the premiums, especially in the property insurance segment falling steeply. Insurers seem to have exhausted their santa bags - all has been quiet this April with discounts remaining static. PSU insurers seemed to do better than their private counterparts - movement of business towards them being a reality.
With retail business growing and corporate business shrinking, the importance of April as a renewal month is coming down as well.
General insurance industry closed its FY09 books with a little over Rs. 30,000 crore in the kitty as gross premium, growth mainly coming from health and motor segments. PSU insurers have held on to the top four positions despite the threat from one or two private insurers.
The waiting line to enter Indian insurance sphere continues with UCO Bank announcing the possible entry in the next six months and Liberty Mutual of US expected to finalise JV with an Indian company in a short while.
On the regulatory front there is palpable action, with the IRDA working on a host of possible regulatory changes and interventions. Bancassurance, the partnership between a bank and an insurer to distribute insurance products, is under the boss’s scanner. This great idea to reach the far and wide of the country also suffers the possibility of miss-selling through untrained people as well as inadequate customer service back up post-sale.
Portability of health insurance, which is a larger canvas than the present set of rules introduced, has to be addressed.
More rural focused initiatives are stated to be in IRDA’s mind to expand the penetration of insurance in the heartland of the country.
There was some hot action on the reinsurance front with rates hardening from the traditional re-insurers, reduction of commission and entry of newer re-insurers. This is a clear result of the discounting that happened in the past year and the impact of slowdown on some of the re-insurers like Swiss Re, who recently reported a potential job cut of 1100.